As per section 3 of Indian Trust Act 1882: “A Trust is an obligation annexed to the ownership of the property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the advantage of another, or of another and therefore the owner.”
CREATION OF TRUST
Types of trusts in India
1. Private trusts and
2. Public trusts.
The Indian Trusts Act, 1882 governs private trusts.
Public trusts are classified into charitable and nonsecular trusts. The Charitable and nonsecular Trusts Act, 1920, the Religious Endowments Act, 1863, the Charitable Endowments Act, 1890, the Societies Registration Act, 1860, and therefore the Bombay Charitable Trust Act, 1950 are the relevant legislations for the popularity and enforceability of public trusts. Furthermore, trusts also can be used as pooling vehicles for investments, like mutual funds and risk capital funds. These trusts are governed by a separate set of regulations: the Securities and Exchange Board of India Regulations, 1996 and Securities and Exchange Board of India Regulations.
Indian Trusts Act 1882 deals with all the matters associated with trusts, trustees, and beneficiaries. Section 10 of Indian Trusts Act 1882 states that “Every Person capable of holding property could also be a trustee; but, where the trust involves the exercise of discretion, he cannot execute it unless he’s competent to contract.”
The position of trustee is a particularly important one, as trustees are during a “fiduciary” relationship with the trust’s beneficiaries. This suggests that they’re in a special position of trust and accordingly have a variety of serious duties. If you’re a trustee, it’s vital that you simply familiarise yourself with those duties, as you’ll be responsible for “breach of trust” if you are doing not full fill them. A person who can own property could also be a trustee. A minor (someone under 20) is often a trustee, but a court would need to appoint someone to act as trustee until the minor turns 20.
As per Section 7 of the Indian Trusts Act, a trust could also be created by everyone competent to contract and by or on behalf of a minor, with the permission of a principal court of original jurisdiction. Following are eligible to make a Trust.
1. Trust by a Hindu Undivided Family;
2. Trust by a Minor;
3. Trust by a Woman;
4. Association of Persons;
As per section 5 of the Indian Trusts Act, a personal Trust about an immovable property must be created by a non-testamentary instrument in writing, signed by the author of the trust or the trustee, and registered (under Section 17 of the Indian Registration Act). Thus, registration of trust is important when it’s declared by a non-testamentary instrument.
This registration would still be required, albeit the instrument declaring the trust is exempt from registration under the Indian Registration Act. In case of a personal Trust declared by a will, registration won’t be necessary, albeit it involves an immovable property. Registration won’t be required, of trust about a movable property. In the case of the charitable trust, whether about movable property or immovable property and whether created under a will or inter vivos, registration is optional but desirable.
In the case of Charitable or Religious Trust about an immovable property, for claiming exemption u/s. 11 of the I.T. Act 1961 it’s essential that the instrument of trust is duly registered.
Step: 1 Select a name
First of all, choose a selected name for the trust. That name should be new and will not cause a violation of any type.
Step: 2 Define the trustees’ number
Determine the trust’s number of trustees. A minimum of
Step: 3 Draft deed for a trust
Afterward, the deed of trust is drafted.
Step: 4 Sub-registrar registration
Trustees and therefore the author of the trust must be present at the sub-registrar office with 2 witnesses for the registration of the deed of trust. A properly attested copy of the deed of trust must tend and registration fees must even be charged.
Step: 5 For PAN and TAN, apply
Upon the filing of a deed of trust, apply for the trust’s PAN and TAN then apply for a checking account.
RIGHTS & POWERS OF TRUSTEE UNDER TRUST LAW
Right to title
A trustee is entitled to possess in his possession the instrument of trust & all the documents of title concerning the trust property.
General Authority of trustees
A trustee has the proper to try to all such acts that are reasonable & proper for the belief, protection, or advantage of the trust property & also for the protection of a beneficiary who isn’t competent to contract. This is often referred to as the general authority of the trustee.
Power to convey
The completion of the sale may require certain formalities (formality of conveyance). Section 39 gives the facility of conveyance to the trustee. The section says that after the completion of the sale the trustee shall have the facility to convey to the person as could also be necessary.
Authority to affect trust property under trust law
Where the authority to affect trust property is given to many trustees and any of the trustees disclaim or dies the authority could also be exercised by the continuing trustee. this may not be applied in those situations where the instrument of trust is restricted on the purpose that the trust executed just some specific number of trustees.
Disclaimer: The entire content of the note has been prepared in accordance with the applicable laws. The author has taken all the remedial measures to ensure accuracy completeness and reliability of the information provided. The author accepts no accountability identifying with the note. The reader is required to refer the important existing provisions of applicable laws. The reader agrees that information gave in the above note isn’t Professional advice and is liable to change without notice by author. The user accepts no accountability for the result of utilization of such data. This note is only for sharing the information for common advantages.